Key points:
- Disney introduce new ad-supported version of Disney+ to win more subscribers
- It will not only allow the company to attract more viewers, but diversified revenue
- The decision follows bold claims of reaching 230-260M subscribers by FY24
In an interesting bid to win over on-the-fence subscribers, Disney (NYSE: DIS) has announced a new arm of its Disney+ streaming service; an ad-supported subscription. Previously, the Disney+ subscription is a non-advertising platform, deriving revenue solely from subscription fees; of which the company had to ensure a steady, growing stream of subscribers.
Now, a more affordable ad-supported option will diversify platform revenue; attract more subscribers, and also open up a whole moat of advertising revenue.
With plans to roll out the new offering in the US by late 2022, and internationally the following year, marketers will be biting at the heels of Disney in order to snatch up some prime advertising space on one of the newest, but quickly rising streaming platforms.
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The plans are all part of Disney’s ambitious plans to reach 230-260M Disney+ subscribers by fiscal 2024 – a goal that has been met with various degrees of contentiousness following bouts of slowing growth.
Kareem Daniel, Chairman of Disney Media and Entertainment Distribution, expresses his excitement about the platform's expansion:
“Expanding access to Disney+ to a broader audience at a lower price point is a win for everyone – consumers, advertisers, and our storytellers…More consumers will be able to access our amazing content. Advertisers will be able to reach a wider audience, and our storytellers will be able to share their incredible work with more fans and families.”
What exactly does this mean for Disney Investors? Firstly, opening up the platform for a lower-paying demographic will undoubtedly grow the platform's market share. Creating further attraction away from prominent services like Netflix and Amazon Prime is imperative to the survival of Disney+ in the long run, rather than the sole aim of providing ‘unique’ content.
Sure, this will hone in on the loyal following, but cost-wise pragmatism is the critical feature of successful streaming services. Secondly, widening the platform's economic moat through advertising is a proven means of diversifying revenue in an otherwise limited long-term outlook, especially at times when subscriber numbers might be slowing. At a first glance, Disney’s move to bring out an ad-supported service is an interesting way of honing in on wider subscriber growth and creating multiple stable streams of revenue.
